State of Vermont charges Celsius with being a ponzi scheme

Michael Hiles

CEO 10XTS, Decentralizing Capital Markets
Staff member
May 29, 2022
Cincinnati, Ohio USA
Vermont state officials allege that Celsius has been insolvent since 2019 according to reporting by Decrypt:

"Vermont state officials have asked for broader powers to investigate Celsius, alleging that the troubled cryptocurrency exchange artificially inflated the price of its CEL token at the expense of retail investors going back over three years.

"By increasing its Net Position in CEL by hundreds of millions of dollars, Celsius increased and propped up the market price of CEL, thereby artificially inflating the company's CEL holdings on its balance sheet and financial statements," Vermont assistant general counsel Ethan McLaughlin declared in the Wednesday filing.

"Excluding the Company's Net Position in CEL, liabilities would have exceeded its assets since at least February 28, 2019,” he continued. “These practices may also have enriched Celsius insiders, at the expense of retail investors."

The document was filed in the United States Bankruptcy Court, Southern District of New York, where Celsius filed for Chapter 11 protection in July. According to Vermont officials, Celsius—through its CEO Alex Mashinsky—made false and misleading claims to investors about the company's financial health, profitability, ability to meet its obligations, and compliance with securities laws.

"[This] likely induced retail investors to invest in Celsius or to leave their investments in Celsius despite concerns about the volatility of the cryptocurrency market," the filing says.

Regulators point to a May 2022 tweet by Mashinsky claiming that the exchange has not experienced any significant losses and all funds are safe.

At the time of Mashinsky's tweet, McLaughlin says, Celsius lacked sufficient assets to repay its obligations and further experienced unrealized losses of approximately $454 million between May 2 and May 22, 2022.

According to the filing, Celsius allegedly admitted the company had never earned enough revenue to support the yield being paid to investors, effectively qualifying it as a Ponzi scheme."

Guess Celsius only got the aphorism, "Fake it till you make it," half right. Now, the $64k question is, how many other crypto companies currently in bankruptcy proceedings of some sort or other were in similar positions. And perhaps more significantly, how many other crypto companies claiming "your funds are safe" but not yet in bankruptcy are actually being truthful.


Defi Degen

New member
Sep 4, 2022
Miami, FL
If they were insolvent all the way back to 2019 and continued to take on investor dollars to pay the returns of prior investors, then it is a ponzi scheme.

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